The Himachal Pradesh High Court reaffirmed that in cases under Section 138 of the Negotiable Instruments Act, payment made to one partner in respect of a partnership’s work constitutes discharge of liability, even if the cheque is issued to another partner. The Court held that the presumption under Sections 118(a) and 139 of the NI Act is rebuttable and can be displaced by evidence of such payment. The decision upholds established precedent and clarifies evidentiary standards for quashing trial court convictions in appeals against acquittal. This judgment provides binding guidance for courts in Himachal Pradesh regarding partnership liability and rebuttal of statutory presumptions under the NI Act.
Summary
| Category | Data |
|---|---|
| Case Name | CR.A/288/2012 of KAMAL PRAKASH Vs GIAN PARKASH SHARMA |
| CNR | HPHC010092822012 |
| Date of Registration | 01-01-2012 |
| Decision Date | 30-10-2025 |
| Disposal Nature | Dismissed |
| Judgment Author | HON’BLE MR. JUSTICE RAKESH KAINTHLA |
| Court | High Court of Himachal Pradesh |
| Precedent Value | Binding on subordinate courts in Himachal Pradesh; persuasive for other High Courts |
| Overrules / Affirms | Affirms settled legal principles from Supreme Court precedents |
| Type of Law |
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| Questions of Law |
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| Ratio Decidendi |
The presumption under Sections 118(a) and 139 of the NI Act that a cheque is issued for consideration and discharge of liability is rebuttable. When evidence establishes that the underlying liability has been discharged (as by payment to a partner), the statutory presumption stands rebutted, even if the cheque was issued to another partner. Section 25 of the Partnership Act makes all partners jointly and severally liable for acts done by any partner in the course of business. Appellate courts should interfere with acquittals only if the view taken by the lower court is perverse or unsupported by evidence. In this case, evidence of payment to one partner discharged the accused’s liability. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
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| Facts as Summarised by the Court |
Complainant and accused were both contractors; work at Bhuntar airport was sublet to the complainant and his partner; a cheque was issued to the complainant, dishonoured for insufficient funds; accused claimed to have paid the amount in cash to the complainant’s partner, supported by a receipt. The complaint under Section 138 NI Act resulted in conviction at trial, acquittal on appeal, and affirmance of acquittal by the High Court based on evidence of payment to the partner. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts in Himachal Pradesh |
| Persuasive For | Other High Courts, as well as the Supreme Court (potential persuasive value, not binding) |
| Follows |
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What’s New / What Lawyers Should Note
- Reaffirms that payment to one partner amounts to discharge of liability for partnership debts, even if the cheque is in another partner’s name, as per Section 25 of the Partnership Act.
- Clearly establishes that the presumption under Sections 118(a) and 139 of the NI Act is rebuttable and vanishes upon sufficient contrary evidence.
- Summarises and applies Supreme Court principles limiting interference with acquittals: appellate courts can overturn acquittals only when the finding is perverse or unsupported by evidence.
- Legal practitioners should advise clients in cheque dishonour cases involving partnerships that liability may be discharged by payment to any partner, not necessarily the one whose name appears on the cheque.
- Demonstrates the necessity of adducing clear evidence when seeking to rebut the presumption of liability under the NI Act.
Summary of Legal Reasoning
- The High Court first recapitulated the established principles for appellate review of acquittals, relying on Supreme Court judgments, especially Surendra Singh v. State of Uttarakhand, Babu Sahebagouda Rudragoudar v. State of Karnataka, and Chandrappa v. State of Karnataka. It reaffirmed that interference is permitted only if the acquittal is patently perverse, based on a misreading or omission of material evidence, or when no two reasonable views are possible.
- The Court examined the evidence: the complainant admitted in cross-examination that the work was done in partnership with Yan Singh Sonkhla, who received the payment and gave a receipt (Ex. DX) confirming ₹1,00,000 as final settlement.
- The Court noted that under Section 25 of the Partnership Act, payment to any partner in the course of business discharges the liability to the partnership.
- On the evidentiary issue, the Court reiterated that the presumption under Sections 118(a) and 139 of the NI Act arises from issuance of the cheque, but is rebuttable. Once evidence is presented showing payment to the partner, the presumption is displaced.
- Applying these principles, the Court held that payment to Yan Singh Sonkhla (partner of complainant) discharged the accused’s liability, rendering Section 138 NI Act inapplicable in this context.
- The High Court found that the lower appellate court had not acted unreasonably or perversely and dismissed the appeal against acquittal.
Arguments by the Parties
Petitioner (Appellant/Complainant):
- The Appellate Court erred in holding that payment to a partner discharges the legal liability when the cheque was issued to the complainant individually.
- Any payment to a partner does not absolve the accused of liability.
- The cheque was in the name of the complainant and not the partnership firm.
- Requested that the appeal be allowed and the acquittal be set aside.
Respondent (Accused):
- The complainant and Yan Singh Sonkhla worked together and the contract was sublet to them both.
- The payment made to Yan Singh Sonkhla was binding on the complainant.
- The Appellate Court took a reasonable view; no interference is required.
- Requested the appeal be dismissed.
Factual Background
The dispute arose when the accused, a contractor, sublet airport excavation work to the complainant and his partner, Yan Singh Sonkhla. For the completed work, the accused issued a cheque to the complainant. When presented, the cheque was dishonoured due to insufficient funds. The complainant served a legal notice, but the accused claimed to have already paid the amount in cash to the partner, which was evidenced by a receipt. Trial court convicted the accused; appellate court acquitted him based on proof of payment to the partner; the High Court affirmed this acquittal.
Statutory Analysis
- Sections 118(a) and 139, Negotiable Instruments Act: The court re-affirmed that issuance of a cheque carries with it a presumption of consideration and discharge of legal liability. However, this presumption is a “rule of law” that disappears once substantial contrary evidence is led.
- Section 25, Partnership Act: All partners are jointly and severally liable; thus, payment made to any partner in the course of business constitutes discharge of liability to the partnership.
- The judgment also cited general criminal procedure regarding appellate interference with acquittals, based on Section 378 CrPC and related Supreme Court interpretations.
Dissenting / Concurring Opinion Summary
No dissenting or concurring opinions are recorded in the judgment.
Procedural Innovations
The court directed the respondent/accused to furnish a personal bond as per Section 437-A CrPC [Section 481 BNSS], to ensure appearance before the Supreme Court in case of appeal.
Alert Indicators
- ✔ Precedent Followed – The judgment affirms established legal standards on both the rebuttable nature of NI Act presumptions and appellate review of acquittals. No new precedent is set, nor is any prior authority overruled.